A total of 32,000 properties are at risk of being repossessed as the UK saw 870 mortgaged homes repossessed between January and March of this year due to the cost of living crisis.
These figures come from UK Finance, as research shows that the number of mortgaged properties being repossessed in the UK has seen a significant 36% increase in the first quarter of 2024. Mortgage rates have skyrocketed by £457 a month, despite UK wages remaining largely the same.
There were 96,580 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, representing a 3% increase from the previous quarter.
Within this group, 32,470 mortgages were in the most severe bracket, with arrears exceeding 10% of the balance, marking a 6% increase compared to the previous quarter.
The cost-of-living crisis and rising household bills have been cited as the primary factors driving this alarming trend.
However, online mortgage advisors Mojo Mortgages have revealed that increased mortgage rates, driven by base rate increases from the Bank of England (BoE), have also played a major role.
After analysing their internal data, Mojo Mortgages have found that the average mortgage rate when re-mortgaging in April 2022 was 1.78%.
However, in April 2024, the average mortgage rate soared to 5.33%. In an effort to tame high inflation, the BoE has raised the base rate from 0.1% in late 2021 to the current 5.25%, which has resulted in mortgage rates increasing over the past couple of years.
For a £250,000 mortgage over 20 years, the monthly payment in April was £1,238. In April 2024, and the same mortgage would now cost £1,695 per month – an increase of £457 per month.
That totals to an extra £5,484 over a year and £10,968 over a two-year fixed-rate term.
The combination of higher mortgage costs and the broader cost-of-living pressures has, unfortunately, put many mortgage borrowers at ‘risk of losing their homes’ according to Mojo.
